This article first appeared in The Edge Malaysia Weekly on June 15, 2026 - June 21, 2026

Malaysia’s data centre operators are not waiting for a single breakthrough to clean up their environmental footprint. Instead, they are stacking incremental changes, from using reclaimed water for cooling and direct-to-chip liquid cooling systems to solar power purchase agreements and renewable diesel substitutes.

That layered approach has become the industry’s working consensus among operators and vendors. OpenDC Sdn Bhd managing director Wong Weng Yew says the sector should stop waiting for a silver bullet.

“There has not been one major breakthrough that changes the whole thing. What I am seeing right now is a number of minor breakthroughs that together will be very significant,” Wong tells ESG.

“In terms of water conservation, there have been technologies evolving that can help to reduce water utilisation by up to 50%, 60%. So that is something I am happy to see the industry moving forward with.”

Cooling remains the clearest example of that gradual shift. OpenDC, a 100% Malaysian-owned operator with six facilities across the country, including its upcoming data centre at the Kedah-Thailand border, has seen its data centre evolve alongside improvements in cooling technologies.

Its first data hall, built in 2015, used air-cooling units similar to a domestic split system. It later moved to chilled water and then fan-wall cooling, which now anchors most of its facilities.

The next step is direct-to-chip liquid cooling, where coolant is piped into racks and circulated through heat sinks mounted directly on central processing units and graphics processing units.

“By year end, more than 70% of our capacity will be cooled down using this technology,” Wong says.

Beyond that lies immersion cooling, where entire server boards are submerged in dielectric fluid, a method that can push power usage effectiveness (PUE) close to 1.0. Adoption remains limited, however, due to the high cost of acquiring specialised fluids, bespoke infrastructure and a shortage of trained technicians.

For many operators, Wong says, the calculation is whether a marginal PUE improvement of 0.1 to 0.2 justifies the added cost and complexity. OpenDC is also exploring eco-chillers for dry sites, which reject heat through a closed-loop system without evaporative water use.

“It does not use water at all. The water is only trapped in the closed loop within the data centre,” Wong says. “Most of our data centres do not have a water issue, but we are always looking into newer solutions, because eventually, water will be exhausted as the data centre industry grows.”

With the exploding demand for artificial intelligence (AI) and rapid development of technology, data centres are under pressure to evolve with time. Regulations on data centres are also tightening due to the intensive use of energy and water, meaning data centres have to ensure their technologies are up to date.

Vertiv Malaysia director of sales management and country head C K Wong says many facilities built in 2023 and 2024 are designed for rack densities of 10kW to 20kW, well below what AI workloads now require.

Vertiv is helping operators retrofit for that shift through liquid-ready designs, hybrid cooling systems, modular coolant distribution units and phased electrical upgrades that allow gradual transitions from air to liquid cooling.

“Future-proofing doesn’t mean ripping out what you built two years ago. It means enabling a structured transition from air-cooled to hybrid, and eventually to liquid-dominant environments where required,” says Wong.

He describes Johor’s tightening approval framework, which now weighs water usage effectiveness and renewable integration alongside power and connectivity, as a sign of market maturation rather than restriction.

In tropical climates, Wong says concerns about condensation are often overstated. “Liquid cooling systems typically operate at relatively higher temperatures, which significantly reduce the likelihood of condensation forming at the chip or cooling interface.”

The bigger change, he adds, is not about the technology itself but how teams are organised. “AI infrastructure is no longer purely electrical, it is electro-mechanical. Teams must build fluency in thermal and fluid management alongside power systems expertise.”

The clearest expression of this layered transition is in Johor, where new data centre developments increasingly combine multiple sustainability measures within a single site.

Yeo Yong Hwang, director of Computility Technology Sdn Bhd, the Malaysian subsidiary of China-headquartered ZData Group, oversees what is currently the country’s only hyperscale facility with provisional GreenRE Platinum certification, awarded in February.

The RM8 billion, 38-acre facility in Gelang Patah, Johor, is designed to operate entirely on reclaimed water drawn from two treatment plants adjacent to an Indah Water site.

“ZData integrated a more water-efficient design in its facilities, incorporated to almost 87% of its liquid cooling system,” Yeo says.

The site also harvests rainwater for supplementary cooling and is expanding its renewable energy partnerships under the Corporate Renewable Energy Supply Scheme (CRESS), with plans for about 630,000mWh of solar power annually from 2028.

Even backup power systems, long dominated by diesel generators, are being reworked. On May 12, Bridge Data Centres (BDC), the Bain Capital-backed hyperscale operator headquartered in Singapore, completed an Asia-Pacific pilot of hydrotreated vegetable oil (HVO) as a drop-in diesel replacement in partnership with EcoCeres.

The fuel, derived from waste feedstock, requires no engine modification and can cut greenhouse gas emissions by up to 90%.

“Sustainability is core to BDC’s strategy. As AI workloads continue to scale across the region, we are committed to advancing innovative clean energy solutions that reduce our carbon footprint while meeting the performance and reliability requirements of our hyperscale customers,” says BDC CEO Eric Fan.

EcoCeres CEO Matti Lievonen says the pilot demonstrates that renewable fuels can meet the reliability standards of a sector that has long depended on diesel for resilience.

“By proving that waste-based renewable fuels can meet stringent reliability and performance requirements in existing diesel backup systems, this pilot offers a practical way for operators to significantly reduce emissions while maintaining the highest standards of reliability.”

BDC plans to scale HVO across its regional portfolio. It is also developing Singapore’s first floating hydrogen power concept for next-generation data centres, alongside longer-term assessments of nuclear energy for AI workloads.

None of these measures, on their own, closes the gap between rapid industry expansion and Malaysia’s climate and infrastructure constraints, as AI workloads continue to increase in density, driving further demand for water and power.

Vertiv’s Wong expects growing interest in on-site generation, including gas turbines and solar-plus-storage systems, as campuses scale beyond 100mw.

“The grid will remain central. However, selective energy autonomy, especially in Johor and Cyberjaya, will likely increase for operators seeking greater control over reliability and long-term cost stability.”

At the national level, the scale challenge is already visible. Speaking at the Datacentre and Cloud Infrastructure (DCCI) Expo on May 12, Minister of Investment, Trade and Industry Datuk Seri Johari Abdul Ghani said Malaysia’s data centres could require up to 8.3gw of energy by 2040.

Yet in 2025, actual demand stands at about 850mw against 1,550mw of approved capacity, a utilisation rate of roughly 55% — a gap he describes as “phantom demand”.

The inter-agency Data Centre Task Force is now considering tighter approval conditions tied to committed customers, alongside penalties for unused capacity.

Tariffs remain another pressure point. Data centres currently pay about 60 sen per kilowatt-hour, while operators continue to push for lower renewable tariffs, even as green supply under CRESS often carries a premium.

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